Increasing numbers of tenancy deposit disputes are being resolved through mediation, rather than the adjudication process, according to figures from the Tenancy Deposit Scheme (TDS).
The research found that the number of deposit disputes between landlords and tenants that are resolved before going to adjudication has risen by 31% in England and Wales, 18% in Scotland and 56% in Northern Ireland over the past 12 months.
The TDS, which offers an early resolution process to help landlords and tenants reach an amicable settlement through its deposit protection schemes, says that less than 1% of the tenancy deposits that it protects in England and Wales end in a dispute.
While 17,628 dispute cases were recorded between April 2018 and March 2019, of that figure, 23% were resolved in the pre-adjudication stages.
Alison MacDougall, the Director of Dispute Operations at the TDS, says: “Resolving disputes over how the tenancy deposit should be divided quickly is beneficial for both the landlord and the tenant.
“That’s why we actively open a dialogue between the parties, to secure a swift and amicable agreement.”
She feels that mediation works best: “Disputes can be tense for parties involved in a tenancy, but we find that, by facilitating a negotiation, we can help defuse situations, and settle disagreements quickly and fairly.
“The parties all benefit from keeping control of the decision, rather than asking a third party to make a decision for them.”
You are also reminded that security deposits will be capped at five weeks’ rent from 1st June 2019, under the new Tenant Fees Act – more information can be found here: https://www.landlordnews.co.uk/category/tenant-fees-ban/
The Scottish Labour Party has proposed a bill that would control rent prices north of the border.
The Fair Rents (Scotland) Bill, proposed by Pauline McNeill MSP, seeks to enforce fair rent prices, by introducing a points-based system.
The law would link rent prices to average wages, to ensure affordability, while giving tenants the powers to challenge rents and seek reductions.
Rules on restricting rent price rises to once every 12 months are already in force in Scotland, through the Private Housing (Tenancies) (Scotland) Act 2016, but the new bill would further control rent prices. Labour claims that it would ensure that no one is “forced to rent a home that pushes them into poverty”.
The bill honours Scottish campaigner and socialist Mary Barbour, who organised rent strikes and actively opposed evictions.
At First Minister’s Questions, the Scottish Labour Leader, Richard Leonard, said: “We have seen the return of private landlord-ism and rents have soared whilst wages have stagnated.
“According to the Scottish Government’s own figures, over 40% of all children living in the private rented sector are now living in poverty. That is 60,000 children.”
He added: “We think that private rent rises should be capped and controlled. So, Nicola Sturgeon has a choice, will she take the side of rogue landlords and a broken housing market? Or she can back Labour’s plans and back our Mary Barbour Bill.”
South of the border, the Housing Secretary, James Brokenshire MP, has rejected rent controls, but the Labour Party supports them.
In recent years, private rental legislation in Scotland has set a precedent for legal changes in England and Wales, notably the tenant fees ban and proposed abolition of Section 21 notices.
What are your thoughts on Scottish Labour’s plans to control rent prices?
Retirees may be financially better off renting than taking equity release, according to Girlings Retirement Rentals.
The Equity Release Council recently reported that almost £1 billion was withdrawn by over-55s through equity release in the first three months of 2019 – up by 8% on the same period of last year.
The industry body for the equity release sector found that 20,400 customers borrowed against their homes, with the average customer taking out a lump sum of £97,763 to fund everything from home extensions to helping grandchildren get onto the property ladder.
Jamie Turnbull, the Business Director of Girlings Retirement Rentals, says that, while equity release suits some people, there are alternatives, such as downsizing or renting, which could make retirees financially better off.
A recent study from Retirement Villages highlighted that 55% of over-55s would consider renting a home, while 48% would rent with a friend.
Turnbull says: “We have seen a year-on-year increase in the number of people choosing to sell their family home to downsize and rent, instead of buying. One of the main benefits is to have access to all their capital without paying interest, like many people have to do when taking out equity mortgages.”
According to advice website MoneySavingExpert, the typical interest rate for a lifetime mortgage – the most popular type of equity release – stands at 5.1%, which is significantly higher than that of most standard mortgages.
Turnbull believes: “By selling up and renting, people can choose to invest and earn money on their savings, as well as have a lump sum to spend on things like home improvements or helping family. Obviously, with renting, there are no Stamp Duty costs, either.
“Often, when people rent, they can plan their finances more carefully, as they know what their monthly outgoings will be, plus, there are no surprise bills, which can crop up for upkeep and maintenance when people own their home. The main barrier to renting, in our experience, is security of tenure. However, with most of our properties coming with assured or lifetime tenancies, this doesn’t need to be an issue.”
He adds: “Renting enables people to downsize to a more manageable sized property, release capital, save on bills and enjoy additional benefits, such as access to a ready-made community and services they may need when they are older. They can then just get on with enjoying their retirement.”
A surge in prime central London buyers has been recorded, in a bid to beat the so-called Brexit deadline, according to the latest Residential Index from London Central Portfolio (LCP), covering April 2019.
The real estate investment advisory looks at the property markets across prime central London, Greater London, and England and Wales, covering new build and existing homes.
Prime central London
In April, the average property value (excluding new builds) in prime central London was £1,930,472. This is up by 13.2% on a quarterly basis.
Annually, transactions stood at 3,295, marking a decline of 16.0%. However, quarterly transactions surged by 24.7%.
The average new build home cost £2,198,662 – a 61.8% premium over existing stock. New build sales stood at just 580 in April, following an annual fall of 18.0%.
Naomi Heaton, the CEO of LCP, says: “Annual transactions in prime central London in April are just above the record lows seen in the last two months and now stand at 3,295. This is a fall of 16.0% annually, amounting to just 63 sales per week on average.
“Despite this glum picture, transactions have seen an almost 25% increase over the last quarter. This has translated into a spike in prices of 13.2%. On an annual basis, average prices now stand at £1,930,472.
“This can be attributed to increased activity seen since last December. Investors came back into the market to capitalise on weak sterling and suppressed prices, before an anticipated uptick post the intended 29th March deadline to exit the EU. Now that the Government has kicked the can down the road, this flurry appears to have subsided.
“It is therefore difficult to tell whether we are seeing the green shoots of a market recovery or a false dawn. Nevertheless, it is indicative of the weight of money waiting to return to the market.”
Surge in Prime Central London Buyers to Beat Brexit Deadline
Greater London
In Greater London, the average house price (excluding new builds) was £635,815 in April, following a month-on-month rise of 3.7%. On an annual basis, prices increased by an average of 2.5%.
Annual transactions dropped by 4.6%, to just 85,898, which is 26.0% lower than at the EU referendum in June 2016.
A typical new build home was worth £714,297 in April, representing a 21.8% premium over existing stock and annual growth of 14.4%. However, new build sales are falling much faster than existing homes, at 15.2% annually, to 12,900.
Heaton comments: “Average prices in Greater London for April are £635,815. This represents a rise of 3.7% over the month, and a very modest annual increase of 2.5%.
“Transactions, however, dropped by 2.9% over the quarter and 4.6% over the year, as continued Brexit uncertainty takes its toll on the domestic market.
“With no real prospect of an immediate improvement to the economy in the face of Brexit headwinds, it appears that, for the time being, buyers are still holding fire until they have a clearer picture of the UK’s direction of travel.”
England and Wales (excluding Greater London)
The average house price in England and Wales (excluding new builds) was £253,522 in April. This followed a monthly decline of 0.8% and quarterly decrease of 2.4%.
Annual transactions continued to fall, by 0.3%, to 800,091. Quarterly, transactions were down by 6.5%.
A typical new build price was £304,140, following annual growth of 3.9%. This represents a 14.9% premium over existing stock.
New build annual transactions stood at 97,035 in April – up by 5.3% year-on-year. On a quarterly basis, however, sales plummeted by 17.3%.
Heaton explains: “Average prices in England and Wales (excluding Greater London) stand at £253,522 for April. This represents a monthly fall of 0.8% and a fall of 2.4% over the quarter. Annual growth is now at its lowest since 2013.
“Average prices have been on a downward trajectory now for seven consecutive months. Where, previously, England and Wales had not shown the same signs of Brexit jitters as the capital, it appears that this is no longer the case.
“Annual transactions are stuttering, with a sizable drop of 6.5% over the quarter and 0.3% annually. These figures will not come as a surprise, with Rightmove recently reporting that 28% of listings have sat on the sales market for more than six months.
“With a common consensus about Brexit appearing to be some way off, with the collapse of cross-party talks, there may be little short-term improvement to the status quo.”
Private landlords are turning their backs on the Conservative Party, with just one in six (16%) now saying that they would support it in an election, according to a survey conducted by the National Landlords Association (NLA).
The study, carried out shortly after the once strongly pro-business party announced its plans to abolish Section 21 notices and end fixed term tenancies, found that more than two thirds (69%) of landlord respondents had voted for the Conservative Party in 2017. However, of those, just 25% said that they would do so again, were an election called today.
Meanwhile, 85% of landlords stated that they would be likely to vote against any party proposing to remove Section 21 and 89% would vote against any party proposing rent controls.
Richard Lambert, the CEO of the NLA, isn’t surprised that landlords are turning their backs on the Conservative Party: “It’s hardly surprising that landlords are losing faith in the Conservatives, given the way their Government has overturned the economic, and now legislative, foundations of the private rented sector since 2015. The Tories’ attitude seems to be ‘well, who else are landlords going to vote for?’ The response is coming back loud and clear, ‘not you’.”
The Conservatives’ mantra that it is the only party for business has a hollow echo to the two-million-plus landlords in the UK who see the Party and its Government refusing to recognise them as having legitimate business interests.
Lambert continues: “Our members have told us that removing Section 21 would be devastating and costly for their businesses. Conservative ministers need to take the time to understand what’s actually happening in the private rented sector, or it may end up costing them dearly.”
Landlords, have you turned your back on the Conservative Party? If so, which party are you supporting instead?
Almost four in ten (38%) landlords will consider selling their properties if the Government goes ahead with its plans to ban Section 21 notices, according to a survey by Landlord Action.
The regulated law firm and eviction specialist also found that a further 33% of landlords would only continue operating in the private rental sector with significant changes to Section 8, if Section 21 is abolished.
The Founder of Landlord Action, Paul Shamplina, has subsequently written to the Housing and Homelessness Minister, Heather Wheeler MP, inviting her to gain a greater understanding of the possession process, before making drastic reforms.
The Government has pledged to encourage longer-term tenancies, which Landlord Action agrees make sense for the tenants that want them, such as families. However, with a current average tenancy lifespan of four years and one month, and with approximately 90% of tenants ending tenancies themselves, there is growing concern that abolishing Section 21 is not the right approach in achieving more security.
According to Landlord Action’s survey, 70% of landlords would be less willing to consider a longer-term tenancy if Section 21 notices were no longer available to them, while 85% would be more selective with their choice of tenant.
“If this was the case, the Government’s efforts could end up being counter-productive and harming the most vulnerable tenants,” Shamplina warns. “Encouraging longer tenancies will only be possible with major investment in housing courts to help speed up evictions, which currently take 22.8 weeks from gaining possession to issuing a claim for eviction, and clarification regarding new grounds within Section 8 to protect landlords.”
He continues: “It is clear from our survey that, with so many other obstacles already faced by landlords, such as the introduction of more regulation, the reduction in the tax relief that landlords can claim on mortgage interest and a 3% Stamp Duty surcharge on buy-to-let properties, there is a real possibility of the but-to-let market significantly shrinking over the next five years, meaning higher rents for tenants.”
With a history of working with the Government on reform and legislative changes, for example, giving evidence to the Select Committee tasked with reforming Section 21, Shamplina has now written to the Housing and Homelessness Minister.
Concerned that, despite the opportunities for tenants, the Government may not have a clear handle on unforeseen consequences that changing the law around Section 21 will present, Shamplina has invited Wheeler to visit Landlord Action’s offices in Borehamwood, to see first-hand the work that the firm carries out, meet the team of solicitors and share their experiences of the court process.
He has also invited Wheeler to attend an eviction with him and see the reality of what happens on the ground, in order to support the Government’s work in formulating policy and new laws that present equal opportunities for everyone involved in the private rental sector.
